Answer:
The correct answer is forward; high.
Explanation:
A spot rate is the settlement price agreed in a spot contract, which facilitates the purchase and sale of a good, value or currency on the spot date, which is normally two business days after the trading date. On the other hand, a forward rate is the settlement price in a forward contract, which facilitates the purchase and sale of a good, value or currency when the terms are agreed but delivery and payment will occur at a future date.
Buyers and sellers look for a spot rate to make an immediate purchase or sale. A forward rate is considered to be market expectations for future prices. It can serve as an economic indicator of how the market expects the future to perform, while spot rates are not indicators of market expectations and are instead the starting point for any financial transaction.
Therefore, it is normal for forward rates to be used by investors, who may believe they have knowledge or information about how the prices of specific items will move over time. If a potential investor believes that actual future rates will be higher or lower than the forward rates established on the current date, it could indicate an investment opportunity.
